Features
24 COVER STORY Shovel ready?
The coalition’s infrastructure plan is said to be the biggest
programme of public works since the Victorian era. The only
issue is getting it off the drawing board, says Mark Hellowell

30 American nightmare
A spectre of ﬁnancial mismanagement is haunting US cities.
David M Walker explores Detroit’s recent bankruptcy and
calls for radical change from the country’s leaders

34 The other October revolution
Eric Pickles has upstaged Iain Duncan Smith when it comes
to pushing through radical beneﬁt reforms. Peter Kenway
explains how Council Tax Support, not Universal Credit,
became the big welfare story this month

38 Productivity watch
You can’t always see it, let alone measure it. But public
sector productivity is key to how services are going to
survive the tough years ahead. Ed Roddis reports

‘EVEN AS
SPENDING ON
PUBLIC SERVICES
IS CONSTRAINED,
THE STATE IS
CREEPING
BACK INTO THE
INFRASTRUCTURE
BUSINESS’

Regulars
4

Leader
Nurturing the green shoots of recovery

5

Second thoughts
Colin Talbot says it’s time for MPs to
ﬁght the good ﬁscal ﬁght

38
Subscribe today for the latest expert
comment on public policy and ﬁnance

19

Restless nation
One year to the referendum

20

Watchdog Watch

Scan here to subscribe to the
leading magazine in public ﬁnance...

18/9/13 21:12:57

CONTACTS

Leader
Grow your own

G

reen shoots of recovery appear to be sprouting up all around.
Growth is on the up, employment is at record levels and
manufacturing is said to be ‘booming again’.
This is welcome news, but the recovery is still very fragile,
and nothing should be taken for granted. Momentum must be
maintained, or we could all too easily return to negative growth.
A Keynesian stimulus may seem out of the question, but infrastructure
investment offers one route to longer-term prosperity. It is reassuring then
that the coalition has embarked on what ministers describe as the ‘biggest
programme of infrastructure development since the Victorian era’.
Launching the National Infrastructure Plan in June, Treasury Chief
Secretary Danny Alexander promised £300bn of investment before the end
of the decade. Schemes include the High Speed 2 rail line, a new schoolbuilding project and a number of offshore wind farms.
It’s a great-looking plan, but how much of it will actually come to fruition?
As Mark Hellowell points out in this month’s cover feature (pages 24–29),
only seven out of 576 projects have so far been completed.
Business leaders, such as the CBI, believe that too many investment
decisions are being pushed back to beyond the next election. Meanwhile,
our road and rail networks continue to deteriorate, and there is increasing
concern over future energy supplies.
Britain is now ranked 28th by the World Economic Forum for the quality
of its infrastructure – below our main international competitors, as well as
countries such as South Korea, Saudi Arabia and Barbados.
Something needs to be done – not just to improve our transport, energy
and digital networks – but also to give our recently resuscitated economy a
new lease of life.
John Armitt, chair of the Olympic Delivery Authority, has suggested the
creation of an independent national infrastructure commission in a review
commissioned by the Labour Party. This could evaluate the country’s needs
looking 25–30 years ahead and avoid short-term political infighting.
Similarly, the London School of Economics Growth Commission has
called for a national infrastructure bank to help increase the supply of
private finance.
Both of these ideas may not fit with the government’s antipathy to
quangos and state interference. But tangible successes have been few and far
between, and the current approach is clearly not working quickly enough.
It’s hard to see how we can turn the initial signs of economic regeneration
into something more robust without taking a long-term approach.

Assertiveness training
There are stirrings of a new
mood in Parliament – now
MPs need to square up to the
executive on tax and spend
After the vote on Syria that saw David
Cameron’s policy defeated in the House
of Commons, many commentators have
started to speculate about a resurgence
in the power of Parliament, as against
that of the government.
They point out that this was the first
defeat on an issue of war and peace in,
well, a very long time. The highly
newsworthy hearings of various select
committees, pillorying the bankers,
News International and the BBC have
also been cited as evidence of a new and
more assertive mood in Parliament.
This has been put down, in part, to the
loosening of the dead hand of the Whips’
offices over appointments to select
committees. There have also been some
rather more hidden changes going on.
The National Audit Office, which used
to work exclusively for the powerful
Public Accounts Committee, has
gradually spread its support to other
select committees. It now regularly
provides them with background
briefings on departmental spending,
value-for-money and performance

issues, and carries out specific valuefor-money studies.
The creation of the Scrutiny Unit in
2002 to support House of Commons
select committees has also, in a modest
way, increased the analytical support
available to committees.
So select committees have become
more independent of parties, and have
more backup at their disposal. And
they have certainly shown a greater
appetite for more robust scrutiny of the
government, beginning about a decade
ago under the Labour government and
no doubt increasing under the coalition.
But this must all be placed in the
context of a weak Parliament vis-á-vis
the UK executive. Take one of the most
important decisions any government
makes: getting and spending public
money. Here, Parliament is extremely
restricted in what it can do.
There is a widespread view that only
government can propose taxes or
spending, and that any defeat on a
‘money’ resolution is tantamount to a
vote of no confidence. Numerous
textbooks repeat this formula in various
ways, even though it’s not strictly true.
Of course, if a government couldn’t
raise taxes (most of which are annual)
or spend money (ditto), it would be

THE PM’S
SYRIA DEFEAT
HAS PROMPTED
SPECULATION
ABOUT A
NEWLY
RESURGENT
PARLIAMENT

effectively powerless. But Parliament
has never used this ‘nuclear option’. If it
wants to get rid of a government, there
are simpler ways of doing it (for
example, in 1979, when Labour lost a
straightforward confidence motion).
Standing Order 48 (which is apparently
300 years old) says that only the Crown
(government) can propose public
spending. Although this only applies to
spending, it is also taken as applying to
taxation. So it is impossible to propose
amendments to either finance bills
(taxes) or supply bills (spending) that
increase either of them.
MPs can propose amendments to
reduce taxes or spending in specific
ways, but this is also hedged about by
procedural barriers. In practice, there
have only been about 20 successful
amendments in almost 100 years – about
one in every five Budgets.
As Philip Cowley, professor of
government at the University of
Nottingham, has pointed out, none of
these was actually treated as a
‘confidence’ motion – somewhat giving
the lie to the widespread belief that all
‘money’ votes are confidence issues.
In fact, Parliament could play a much
more active role in amending proposals
for tax and spending than it does – the
only real barrier is its own standing
orders and the widely held view that this
would be somehow ‘unconstitutional’ or
a ‘confidence’ issue, when it is neither.
Plenty of other legislatures play a more
active role in these issues.
Only when Parliament begins to take
real power away from the executive
will we really start to see a genuine
rebalancing of power in our system.
There are stirrings in this direction –
but so far, that’s all they really are.

Colin Talbot is professor of government and public
administration at the University of Manchester
Photo: Getty, Illustration: Thea Brine

PFoct13.005_2nd_thoughts.indd 1

OCTOBER 2013

PublicFinance 5

18/9/13 17:52:42

News
PF exclusive interview

Neighbourhood budget
rollout backed by Foster
BY RICHARD JOHNSTONE

The government’s neighbourhood
Community Budgets programme,
which is intended to give local areas
greater control over public spending,
could be rolled out across the country,
local government minister Don Foster
has revealed.
In an exclusive interview with Public
Finance, Foster said the programme,
which brings local people and service
providers together to identify where
improvements could be made, had

been successful in 12 pilots.
Among the projects taken forward
are plans to integrate public spending
in White City in the London Borough
of Hammersmith and Fulham, which
hopes to utilise greater local decisionmaking to ﬁnd efﬁciencies.
A second successful programme
would coordinate health spending in
Birmingham’s Castle Vale area.
In July, Foster announced that the
government would support 100 new
projects to further test the idea, now

Model community: a plan to integrate public spending and increase local decision-making in White City is in development

6

renamed Our Place. Around £4.3m
would be available to ‘build up’ the
rights of local communities to become
more involved in local spending
decisions, he said.
The minister told PF that the
government would soon announce plans
to appoint an organisation to distribute
the money to local schemes. ‘We’re
looking to agree who is going to take on
the running of the next stage of this
scheme. We will have a body that will
have access to the funding we’re making
available, and that will also provide the
help and support.’
This could lead to the scheme being
rolled out nationally, Foster intimated.
‘It could go nationwide, it really could,’
he said.
‘If you look at opinion polling, people
are increasingly wanting to be engaged
in their local community, and they want
to have a say. We’re ﬁnding ways to do
that through a variety of routes – of
which Our Place is a very important one
– to help people look at services that are
delivered in their area.’
The pilots required public spending
data to be broken down to a very local
level, Foster noted. This was completed
in a way that had not been done before
and the process had identiﬁed potential
new savings.
‘They look at all of the money and
what it was spent on, and work out how
they could save a signiﬁcant sum of
money by co-locating different services,
by avoiding some of the duplication and
by doing things differently,’ he
explained.
This local analysis of spending could
be further rolled out alongside the
government’s other ‘whole place’
Community Budget scheme, which
covers entire local authority areas,
Foster added. This would improve the
coordination of local public spending
through ‘much more sensible working’.
‘One of the things we have to start
recognising, at both the local and the
macro level, is that there’s going to have
to be much more partnership working.

PublicFinance OCTOBER 2013

PFoct13.006_007.indd 1

18/9/13 21:19:41

publicﬁnance.co.uk/news

LocalGovernment
■ Richard Johnstone

Furore over ﬁnance ofﬁcer
dismissal protection scheme
‘At the level of local communities, that
requires people to think differently
about the whole issue of governance.’
Ahead of the launch of the extended
pilots, Foster predicted that many
councils would embrace the idea of
giving communities more of a say in
spending decisions, and expected to
have many places to come forward.
However, he admitted that some
councils had only demonstrated an
interest in reaction to central
government funding cuts.
‘It would be very dishonest of me to
say that some councils have come to this
approach because of a great belief in
doing so. For some of them, the ﬁnances
have put this upon them.’
There were a number of councils that
were involved in the neighbourhood
Community Budgets because they
believed in it, but those that ‘did it
because they had to’ were increasingly
working with their neighbourhood or
their communities because they see it as
right, he added.
Responding to Foster’s comments,
Peter Fleming, chair of the Local
Government Association’s Improvement
and Innovation Board, said local areas
should have greater control over the
way public money is spent. He said Our
Place was one way of providing this.
Fleming told PF: ‘A key element of
any wider roll-out is ensuring that
public money is well spent and that the
new structures are subjected to
democratic oversight and
accountability at a local level.
‘It is important that this isn’t treated
like the start and ﬁnish of the drive to
take power out of Whitehall and place it
into the hands of local people.
Ultimately, the aim has to be rewiring
services around the people who use
them and the places where they live, and
that requires a fundamental rethink of
the way the public sector is structured.’
Laura Wilkes, the Local Government
Information Unit’s policy manager, was
involved in the neighbourhood budget
pilots. She told PF that any attempt to
Photo: Alamy

PFoct13.006_007.indd 2

Councils could face a slew of
employment claims unless
ministers back down over plans
to scrap the protection against
dismissal given to chief ﬁnance
officers, a senior lawyer has
warned.
Local Government Secretary
Eric Pickles announced earlier
this year that the government
wanted to take action to stop
senior local government officers,
such as chief ﬁnance officers,
receiving large payoffs if they
were dismissed.
Pickles announced a
consultation on changes in
the current local government
standing orders to remove the
requirement for a ‘designated
independent person’ to review
cases before senior officers
holding statutory positions are
dismissed. Pickles said this
‘bizarre bureaucratic ritual’ had
led to larger payoffs for officers
including chief executives, and
said only a council vote should
be required.
Following the consultation,
which closed in March, an
announcement from the
Department for Communities
and Local Government about
whether the provision will be
removed is expected soon.
But a senior local government
lawyer told Public Finance that
ministers would face difficulties
in implementing the change.
Sarah Lamont, a partner
at law ﬁrm Bevan Brittan,
said it would be impossible to
impose the reforms, as they
require changes to individual
employment contracts as well
as to standing orders. Model
contracts for senior officers in
local government have been
‘built around’ the DIP process,
she said.
‘So they [senior officers] could

DIP denier: Eric Pickles wants to end ‘bizarre’ rules that prevent dismissals
well have a claim if the council
was to dismiss them for lack of
competence or conduct. They
could sue the council for breach
of contract for failing to follow
an expressed procedure,’ she
told PF.
Lamont added that, as
individual contracts need to
be changed to remove the DIP
provisions, it would be many
years before the reforms had
any impact.‘Unless you get your
senior officers to change their
contract – and why would they if
they have that protection in their
contract? – or take up new roles,
it’s still going to be there as a
protection.’
CIPFA has raised concerns
that removal of the DIP
provisions would erode
safeguards that protect the duty
of the chief ﬁnancial officer to
represent the interests of the
local ratepayer to councillors.
Lamont, who specialises in
local government employment
cases, added that the safety
net of the DIP provisions was
important. ‘[Councils] can’t, on
a whim, get rid of a chief ﬁnance

roll out the scheme nationally would
also need a mechanism to ensure that
lessons and best practice were shared
across the country.
‘I think that’s a real challenge for the
sector. If one area innovates around
services and develops something
exciting, there are certainly questions
about how that becomes scaleable across
the rest of that local area, and how that

officer who’s questioning some
ﬁnance arrangement. That’s
going to give CFOs a level of
protection and encourage them
to carry out their duties and say
what needs to be said.’
CIPFA chief executive Rob
Whiteman warned that the
removal of the DIP had the
potential to weaken the ability of
a CFO to represent the interests
of all parties in the council and
robustly defend those of the
local taxpayers.
‘At a time when councils are
increasingly ﬁnding themselves
having to make very sensitive
decisions about service cuts and
delicate funding decisions are
in the balance, it seems unwise
at best, if not to say reckless, to
withdraw the safeguards that
are designed to ensure a degree
of fairness in, and the long-term
sustainability of, public ﬁnances
at a local level,’ he said.
A spokesman for the
DCLG said: ‘The government
is considering its response to
the consultation, and we hope
to make an announcement
shortly.’

can be shared across the sector.
‘I hope there will be one thousand
ﬂowers blooming, but at the same time,
there is that age-old problem [of]
duplication in the sector and
inefﬁciencies.
‘I hope that there will be capacity in
the programme for areas to learn from
each other, and if there is any really
good innovation, that this is shared.’
OCTOBER 2013

PublicFinance 7

18/9/13 21:20:25

News

Analysis
Public service mutuals

Getting into the
spin-out of things
Public service mutual spin-outs appear to offer
staff a greater say in the way their organisation
runs, which in turn increases motivation. But not
everyone is persuaded, says Vivienne Russell
The National Audit Office recently
delivered an early verdict on one of the
government’s flagship projects: the
MyCSP mutual. Auditors concluded that
despite some early teething problems, the
organisation, which administers the civil
service pension scheme, was on track to
deliver projected savings of 25%.
The Cabinet Office, which has taken on
the role of Whitehall’s public service
mutuals’ champion, was quick to hail the
NAO’s findings as a testament to the
success of the employee ownership model.
Giving staff a greater say over the running
of their organisation leads to better
quality and better-value services, it says.
‘Public service mutuals are appearing
all over the country because nurses, social
workers, probation officers and other
frontline staff want the freedom to do
their jobs in the way they know is best,’
says a Cabinet Office spokesman.
‘With over 70 mutuals now delivering
more than £1bn of public services, we are
witnessing a quiet revolution in our
public services.’
It’s a view echoed by Iain Hasdell, chief
executive of the Employee Ownership
Association and a member of the Cabinet
Office’s Mutuals Taskforce, which has
issued recommendations on ways to boost
the size and scope of public service
mutuals. He says there is consistent
8

PublicFinance OCTOBER 2013

PFoct13.008_009_news_analysis.indd 1

evidence that each time a public service
spins out into a mutual, service quality,
productivity and staff fulfilment all
increase. ‘The advantages are compelling,
clear and, to those who have insights,
incontestable,’ he tells Public Finance.
Hasdell makes the striking observation
that the current climate of cuts and
insecurity in the public sector has helped
to sharpen interest in employeeownership models. ‘It’s precisely because
people think that they can take some
control of their own destiny and build a
business that does protect their jobs, as
opposed to waiting to be a victim of
circumstance,’ he says. ‘The demand has
risen almost because of austerity, which
is quite an interesting trend.’
Talk to those working on the front line
in public service mutuals, and the
attraction of wresting some control of
your own fate comes through strongly.
Sam Boulton is marketing and sales
manager at Aspire Sussex, an adult
education provider that ‘spun out’ of West
Sussex County Council in September last
year. Asked what the impetus behind
mutualisation was, he offers the
observation that: ‘We wanted to be at the
forefront of choosing our own destiny.
‘Staff have a much greater opportunity
to support the strategic direction of
Aspire. It’s very different to a department

within a county council because there,
you’re a small cog in a big organisation,
and staff tend not to see the top level of
how things are running.
‘Now that we have a staff representative
group, everyone has an opportunity to put
their ideas forward.’
At the other end of the country,
operating from a base in Hull, is City
Health Care Partnership, which spun out
of the local NHS and into a mutual in
June 2010. It employs around 1,500
people who provide a range of primary
and community care services in Hull and
beyond. Since spinning out, it has seen
annual growth of 10% through acquisition
of other services, diversification and
service efficiencies.
Chief executive Andrew Burnell, who
led the spin-out process, says employee
ownership offered a good way to preserve
Photo: Alamy

18/9/13 21:25:03

publicﬁnance.co.uk/news

QuoteUnquote
‘People think they can take some control of their own
destiny and build a business that protects their jobs, as
s
opposed to waiting to be a victim of circumstance.’
Iain Hasdell, chief executive, Employee Ownership
Association

‘There is very little evidence that our members are
interested. They’ve seen what happens to people who have
int
been outsourced to the voluntary and private sectors.’
bee
Heather Wakeﬁeld, head of local government service
He
group
g
gr
o Unison

‘IT SPLICES THE BEST
OF THE PUBLIC
SECTOR WITH THE
BEST OF THE
PRIVATE SECTOR,
AND CAN UNLOCK
GREAT POTENTIAL
IN YOUR
WORKFORCE’

public sector values in an organisation
that needs to behave like a business.
‘It’s about creating a psychological and
emotional construct with the
organisation,’ he tells PF.
‘I firmly believe that our success is
down to that view.’
Both Boulton and Burnell emphasise
the greater freedom mutual status has
brought to their respective organisations.
Boulton points out that Aspire Sussex can
now draw up and define its own
procedures and guidelines, and apply for
extra funding it was not able to access
when it was part of the county council.
Geographical barriers have also been
torn down, and both Aspire and City
Health Care Partnership have expanded
operations beyond their old public sector
boundaries. City Health Care, for
example, recently won a contract to
provide services in Knowsley,
Merseyside.
‘We have the freedom to be different
and do things differently,’ says Burnell.
‘One of the beauties of this is it takes the
best of the public sector and splices it to
the best of the private sector. If you get
the leadership right, you unlock great
potential in your workforce.’
But other voices sound a far more
sceptical note. Heather Wakefield, head
of local government at the public sector
trade union Unison, tells PF there is ‘very
little happening’ on the mutual front in
councils.
‘Mutuals and co-ops are hugely
time-intensive; they require technical
resources, they require money, and most
of all, they require motivation by the
people involved,’ she says.
‘There is very little evidence that our
members are interested. And why would

they be? They’ve seen what happens to
people who have been outsourced to the
voluntary and private sectors.
‘To be honest, we’ve got the longest
working hours in Europe in this country,
and it requires people to put in a huge
amount of their own time.’
Wakefield acknowledges that mutuals
might have a role to play in a particularly
niche service area, but she adds: ‘I can
think of no reason why it should happen
otherwise, or why services should be
spun out.’
The Trades Union Congress recently
joined with Cooperatives UK to warn that
staff should not be strong-armed into
going down the mutual path. It put
forward a set of best-practice guidelines
that should be followed if public sector
mutuals are to offer genuine employee
ownership and representation.
But at the Employee Ownership
Association, Hasdell says there is ‘no
evidence’ that public service spin-outs are
being forced through against the will of
the employees concerned. ‘The evidence
is that these are entrepreneurial
employees who wish to break free and set
up a business,’ he says.
Trade union opposition can make
public sectors commissioners reluctant to
encourage and pursue mutual options,
Hasdell notes. He stresses that for
mutuals to take hold and become a
mainstream part of public sector
provision, it will take a radical shift in
commissioning attitudes.
‘The real key to this is changing the skill
and will of commissioners,’ he tells PF.
‘But it needs to be done at a relentless
pace if it’s going to make any difference.
This isn’t some minor tweaking of
behaviour. It’s really fundamental.’
OCTOBER 2013

PFoct13.008_009_news_analysis.indd 2

PublicFinance 9

18/9/13 19:23:33

■ Women and children ﬁrst?, by Vidhya Alakeson ■ Out of Africa, by Neil Cole

Opinion
■ Vidhya Alakeson

Women and children ﬁrst?
At this season’s annual party
conferences, the race has been on
to court the all-important female
vote. But recent difﬁculties with
childcare policy-making indicate
how far they still have to go
Over the past ﬁve years of the economic
downturn, women have been on
the front line of the struggle to stay
ﬁnancially aﬂoat. They have borne
the brunt of public sector job cuts and
pay freezes. Too many have seen their
employment rights eroded, and yet
they are still the ones, in the majority
of households, who have to balance the
household budget in the face of falling
wages, rising costs and reduced support
from government.
But now the economy has begun
to recover, women will be looking
for reassurance from each of the
three main parties that they and their
families will benefit from growth. At
their annual conferences, each party
has been tailoring its message to appeal
to women voters, and so stand a chance
of victory in 2015.

No single issue has become more
of a battleground for the female vote
than childcare. UK parents spend more
on childcare than those in most other
developed economies. With more
families needing to have two people
in work just to get by, the exorbitant
costs of childcare are frequently cited
as a major barrier to women seeking
employment.
In an attempt to woo working
women, the government announced
nearly £1bn for childcare at this year’s
Budget. The bulk of that money – £750m
– will pay for a new system of childcare
vouchers for better-off parents who are
not eligible for Universal Credit.
The intention is to target support
towards those families that currently
receive limited help from the state and
for whom childcare costs can feel like
a second mortgage. From 2015, these
parents will be able to claim up to
£1,200 a year in childcare support.
But a policy that was intended to
build bridges between Conservatives
and female voters, and to partially
compensate those who had lost child

benefit, backfired because traditional
Tory supporters rejected it. The new
childcare voucher is only available if
both parents work, fuelling accusations
that the government is pushing women
out to work and does not value stay-athome mothers.
Arguably, the policy does the reverse:
it gives those parents who would like to
work but cannot afford to because of the
high costs of childcare the same choices
about whether to stay at home or go to
work as parents who are more affluent.
But the policy provoked more of a row
about the appropriate role of women
than it achieved in terms of voter
support for the Tories.
In response, the party quickly
announced its plans to introduce a
married person’s tax allowance in this
year’s Autumn Statement. While this may
satisfy those the party has angered the
most, it will put off many of the working
women it seeks to reach, as they will
likely consider it out of touch with the
reality of today’s diverse families.
When it comes to child- and femalefriendly policies, the Liberal Democrats
have generally fared better. Although
it was a policy initiated by the previous
government, they have claimed as their
own the introduction of free childcare
for disadvantaged two-year-olds, and
have won the support of parents and the
childcare sector for quashing childcare
minister Liz Truss’s proposal to loosen
ratios of nurseries and childminders.
As part of the Budget deal, the
LibDems secured £250m of childcare
support for less-well-off families who
would otherwise have been overlooked
– although the way that money will be
targeted is perverse, as it tends to favour
the higher earners within the group over
Photos: PA/Alamy

18/9/13 17:49:01

publicﬁnance.co.uk/opinion

Not child’s play: With most UK families needing two people in work just to get by, the exorbitant costs of childcare present a major barrier to women seeking employment

those on the minimum wage.
The LibDems have also pinned their
colours to the extension of flexible
working and the introduction of
shared parental leave, both popular
policies with women. However, with a
significant number of new jobs still only
part-time or temporary, it will be some
time before employees are willing to
exercise these rights in the workplace
without fear of repercussions.
Overall, both sides of the coalition
have been let off lightly because Labour
has failed to make the running on
childcare. Despite being an area where
Labour should expect to lead the polls,
they have so far said very little about

what they would actually do regarding
childcare if they were to win in 2015.
They have not even identified it as one
of their top policy priorities, which is
clearly a problem.
While the gender divide among voters
is greatest for the Tories, Labour cannot
take the female vote for granted. At the
very least, the party should be arguing
to spend the £1bn the government has
already identified differently. It could
win significant support by focusing on
the very youngest children – one-yearolds – where there is currently a
gap between the end of maternity
rights and the LibDems’ new free
childcare for two-year-olds.

The new childcare voucher is only available if
both parents work, fuelling accusations that
the government is pushing women out to work
and does not value stay-at-home mums

Childcare for one-year-olds is
expensive and needs skilled carers, but
that is the critical year where women
become disconnected from work – and
all too often, struggle to ever get back.
Some enhanced support for less-welloff parents at this point would at least
make it clear that politicians really
understood the challenges facing
working mothers.
This conference season brings a lot
to play for, as all parties are no doubt
aware. As well as childcare, there
are other opportunities to court the
female vote: care, low pay, uncertain
employment, and a solution to high
rents and insecure tenancies are all
issues that affect both women and
families, and that need to be addressed.
This is just the beginning of the race
to 2015, but so far, there have only been
a few false starts, and Labour has been
left standing in the blocks.

Vidhya Alakeson is deputy director of the
Resolution Foundation

OCTOBER 2013

PFoct13.010_011_opinion.indd 2

PublicFinance 11

18/9/13 17:49:25

Opinion
■ Neil Cole

Mind the gaps: the Cabri seminar, held in Nairobi at the end of August, discussed the ‘missing links’ in public financial management reform and offered some potential remedies

Out of Africa
Africa has made some
progress on its public financial
management reforms, but there
is still a long way to go
THERE HAS BEEN, and still is today, no
shortage of attempts at administrative
and governance reforms in Africa,
dating back to the early days of
independence and democratisation.
Some of these have improved systems
and been embraced wholeheartedly,
while others have not resulted in any
positive change.
Public ﬁnancial management reform
efforts across Africa have focused on
three broad themes: fostering marketfriendly governments through
privatisation, deregulation and trade
liberalisation; emphasising greater
discipline in civil service and budgetary
regimes; and modernising and
formalising government processes
through ﬁscal rules, Medium-Term
12

PublicFinance OCTOBER 2013

PFoct13.012_013_opinion2.indd 1

Expenditure Frameworks, internal
audit regimes and decentralisation.
Where reforms have not brought about
an improvement to the budget system, it
could be that the move was intended
merely to make the government look
good to the donor community.
Public Expenditure and Financial
Accountability scores appear to indicate
that, despite the myriad reform
programmes across the continent, several
challenges remain. These reveal that
about 90% of African countries have de
facto gaps, meaning they score lower
in implementing laws than they do in
passing them.
Countries such as The Gambia,
Seychelles and Ethiopia do not have

de facto gaps; meaning their
implementation of laws is stronger
than the laws themselves.
The Pefa data also reveals that 93% of
African countries have gaps when it
comes to decentralising regulation,
meaning those who have to implement
the rules score lower than those who
pass laws and introduce processes.
However, Botswana, The Gambia and
Niger do not have these gaps. Their
concentrated agencies (such as central
government departments) appear to be
less effective than their implementing
agencies (including local government).
Furthermore, 78% of African
countries have ‘downstream’ gaps,
meaning budgets are formulated better

Despite myriad reform programmes across the
continent, about 90% of African countries have
de facto gaps, meaning lower scores for
implementing laws than for passing them
Photo: Getty

18/9/13 21:05:06

publicﬁnance.co.uk/opinion

pfBlogs

A DIGEST FROM THE WEB
than they are executed.
The countries whose budget
formulation processes are not as strong as
their budget execution processes are:
Chad, Seychelles, Mauritius, Tanzania,
Cote d’Ivoire, Niger, Ethiopia and Congo.
Similarly, the Open Budget Index – a
measure of budget transparency,
participation and oversight – reveals
comparable gaps. About two-thirds of
countries have a transparency gap,
especially in the sense that budgets are
more transparent at a central level than
where they are being implemented.
These issues were discussed recently
at the ninth annual seminar of the
Collaborative Africa Budget Reform
Initiative. Senior budget ofﬁcials from 26
African countries met over three days in
Nairobi to examine critical challenges in
public ﬁnancial management reforms.
Delegates unpacked the reasons many
African countries have moved from one
budget reform to another without
making the system more functional.
The seminar aimed to explore the
ways senior budget ofﬁcials can promote
change and embed the reforms in a way
that improves budget systems, and to do
so in the context of: leadership
challenges; scarce capacity; poor pay;
inefﬁcient bureaucratic processes; donor
pressure; and weak incentives.
The underpinning analysis for the
seminar was based on work undertaken
by Matt Andrews, associate professor
at Harvard Kennedy School of
Government. Andrews’ premise is that
reforms fail because: the contextual
realities are often overlooked; ‘best
practice’ interventions are often beyond
the reach of developing countries; and
reforms often focus on narrow groups of

‘Proposals from the Department for Communities
and Local Government to remove safeguards for
local public ﬁnances could, in the long run,
precipitate a whole variety of serious problems for
local government ﬁnance and governance ’
Rob Whiteman, incoming CIPFA chief executive

‘The government has successfully framed all
economic debates on its own terms, with a powerful
narrative that is resilient to different cicrumstances.
If the economy is strong, the medicine is working; if
the economy is weak, we need more medicine ’
Carys Afoko, head of external affairs, New Economics Foundation

‘We are emerging from the depths of the worst
downturn since the Great Depression, but nothing
has fundamentally changed. Corporate proﬁts are
up largely because payrolls are down ’
Robert Reich, former US Secretary of Labor and professor of public policy
at the University of California at Berkeley

‘The National Audit Ofﬁce has show that IT is
causing a major headache for the government’s
Universal Credit scheme. But if the delay is used to
address future problems, the computer saying ‘no’
could be a blessing in disguise ‘
Nigel Keohane, deputy director, Social Market Foundation

champions, which results in
implementation problems later on.
Ofﬁcials present at the seminar
identiﬁed a number of ‘missing links’ in
their reform programmes, including:
● insufﬁcient reﬂection on
fundamental problem and priorities;
● reform content driven by
international ‘best practice’ and not
aligned with local constraints;

Common cause: senior budget
officials from 26 African nations
discuss the challenges to financial
reform at the Cabri seminar

● inadequate communication with
stakeholders and political leadership on
reform needs and objectives; and
● persistent capacity constraints at
different stages of the process.
But they did offer some potential
remedies, such as:
● using clear strategies, adequate
feedback and strong coordination;
● introducing parallel public sector
reforms, since PFM reforms are not
likely to work without these; and
● inclusion of the implementing
institutions, which are often located at a
decentralised government level.
Clearly, while progress has been made
on public ﬁnancial management reforms
in Africa, there is still a long way to go.
We hope to see some positive strides by
the time we meet next year for the tenth
annual seminar.

OpinionLetters
You can e-mail your letters to letterstoeditor@publicﬁnance.
co.uk. Please include your name and address and a daytime
phone number. The editor reserves the right to edit letters

All joined up?
Clive Betts (News, 2 September) says,
correctly, that combined authorities
could act as a basis for greater collaboration in other city regions. But I can’t help
wondering what this means for the rest
of the country.
He is also right to say that it will be
interesting to see how it works. The
relationships between nearby local
authorities in these city regions – as in
other parts of the country – have not
always been, to put it delicately, as
mutually supportive as one would
hope. So will the prize of regional
coordination be big enough to trump
what are often decades-old political
(with a small p) disagreements?
But let’s be optimistic, and assume
that all goes well with the new
arrangements. Even if the next couple of
years see a succession of successful
applications for combined authorities,
both from the ‘Core Cities’ and even
some of the nascent ‘Key Cities’, there

Better together? the South Yorkshire combined authority

will still be a very large number of
councils – including some very big
ones – who will not be part of this,
being either urban but part of a smaller
municipality, or rural but not adjoining a
major city. What does the future hold
for them, then – are they to become just
the ‘spaces in between’ cities? Or will it
be combined authorities for all?
In which case, the sooner everyone
knows they should be thinking about

who they should be joining forces with,
the more likely places are to be ready to
seize the opportunity when it comes.
And what will this mean for the capital
– shouldn’t the boroughs also be
thinking about forming sub-London
combined authorities?
Mr Betts hints at the concept of
combined authorities playing a new and
vital role in providing the democratic
underpinning for local enterprise
partnerships when he suggests that they
would help ‘shape the governmental
arrangements to fit the economy, rather
than the other way around’, although it
is also likely to require some
reconfiguration of LEPs as well.
Therefore, this is not just a question of
technicalities – if CAs and their
associated LEPs are to prove the basis
for future central-local negotiations over
devolution of powers and funding, this
becomes a pretty fundamental question
for the future of local government.
ALEX THOMSON
Chief executive, Localis

Blog

Responses to blogs on publicﬁnance.co.uk
Austerity
stories
Carys Afoko argued
that government
critics need to tell
a more convincing
story to counter the
chancellor’s claims
EDWARD HARKINS:

Well called. Some
social housing
professionals have
seemingly swallowed
the coalition’s line
on ‘fairness’ on the
bedroom tax – as in
it’s not fair some poor
people suffer less
than their next-door
neighbours, so the ‘fair’
14

answer is to cut the
benefits. Hearteningly,
recent polling indicates
the UK public may be
starting to reject this
false idea of what is
fair. Moreover, part of
the coalition’s ‘fairness’
is that if you are a rich
landowner or landlord,
it’s fair you benefit from
state welfare.

are fundamentally
not-for-profits. They
are making profits,
but unlike traditional
businesses, they use
those profits for social
good. Therefore, tax
relief that supports
organisations to
increase sales, expand,
trade more and
generate more profits
is potentially viable for
investors, and creates
additional benefits in
communities. Also, it is
likely the relief would
be directed towards
loan rather than just
share investments,
as the majority of
social enterprises
and charities are

limited by guarantee,
and therefore
cannot accept
share investments.
This would result
in some form of
Enterprise Investment
Scheme for loan
investments, and,
unlike Community
Investment Tax
Relief, the investor
would choose which
organisation receives
the investment.

Not in my
back office
Michael Ware
wrote that nimbyist
objections to using
commercial property

for housing should
be overruled
ROGER HINTON:

Interesting ideas, but
you make no mention
of the recent change to
permitted development
rights, which hugely
simplifies the process
of obtaining permission
to change a property
from offices to housing.
In Brighton, a former
department store is being
developed for student
housing, and there are
numerous applications
to change empty office
buildings to blocks of
flats, all without the
inducement of a costly
130% tax allowance.
Photos: Alamy

18/9/13 19:27:16

PFOct13.015.indd 14

17/09/2013 13:02

Voice of the

Nations
Scotland

Baillie calls for review of Aleos
NEWS FROM THE DEVOLVED ADMINISTRATIONS
Scotland S Scotland cotland
BY KEITH AITKEN IN EDINBURGH

The powers of Scotland’s local spending
watchdog, the Accounts Commission,
should be reviewed to take account of
councils’ increasing use of arms-length
external organisations (Aleos), the
commission’s outgoing chair has told
Public Finance.
In a valedictory interview, John Baillie,
who retires this October after ten years
on the commission with six as its chair,
also revealed that the watchdog would be
looking afresh at its ability to ensure best
value in council spending, and extending
its audit programme for Community
Planning Partnerships (CPPs).
PF last month reported mounting
concern in Scotland’s voluntary sector
over charitable status for Aleos and the
extent to which they enable authorities to
evade due scrutiny of their activities.
The Scottish Council for Voluntary
Organisations plans an inquiry into the
behaviour of a selected sample of Aleos.

Baillie’s approach would draw on
the commission’s duty to police the
delivery of best value by councils, he said.
‘One of the matters we’re looking at just
now is the power the commission has to
assess the best value afforded to a council
or a CPP by Aleos,’ he said. ‘We should be
able to say, “show us how this is
delivering best value”.’
Baillie pointed out that the
commission had established a key
principle in its 2005 paper Following the
public pound that councils had a duty to
achieve best value for all their public
money, regardless of how or where this
was being spent.
There was, he acknowledged, a
growing debate about the effectiveness of
councils’ supervision of Aleos, which
therefore raised a question: ‘Should the
Accounts Commission have additional
powers to gain direct access to
information from an Aleo, including
direct access to its people?

Powers police: outgoing
chair of the Accounts
Commission John Baillie
urged a review of the
watchdog’s powers to
determine whether councils
and CPPs deliver best value

16

‘We could also enhance our power to
look at the governance issues around
Aleos,’ Baillie added, arguing that the
proper scope for such powers might be
‘governance of whether it’s achieving
best value rather than the governance of
the Aleo itself.’
Since the commission’s remit is limited
to local authorities, the way ahead would
likely involve ﬁnding the logical
parameters of its existing powers, rather
than seeking a new Aleo remit, he said.
Baillie also revealed that the
commission has decided to look at its
best-value powers again. This review
was likely to place greater stress on the
pace of improvement, he said. ‘It’s a
much more targeted approach. Risk
assessment in each council now informs
the process better. It’s the stuff that we
see as more risky that we would target
for a best-value visit.’
The commission has pioneered
methods to monitor CPPs, and published
three pilot CPP audits earlier this year.
Baillie said it would shortly embark on a
further ﬁve, this time geared towards
looking at the partnerships’ forward
plans rather than their historic
willingness to develop the sort of
collaboration demanded by ministers.
‘One of my mantras is “fair and
proportionate” – if we lose the reputation
for being that, then people will stop
taking us seriously,’ he said.
Baillie, a former KPMG partner, also
recently stepped down after nine years
on the Competition Commission. He
retains a private practice and a visiting
professorship at Edinburgh University,
but admitted that he hopes to ﬁnd some
new public sector role, ‘because I ﬁnd it
fascinating, and I think I’ve got
something to offer’.